Market Overview: Both gold and silver are moving slightly higher in early action to begin the new trading week. Investors will have plenty of things to digest this week, including some key economic data and a meeting between President Trump and Chinese leader Xi Jinping. The meeting will likely garner some significant attention as Trump has referred to China as a currency manipulator in the past. The President may, however, tone down the rhetoric a bit as he looks to establish a working relationship with China.
Key Data Points: The latest reading of the PMI Manufacturing Index showed a reading of 53.3, below the previous reading of 54.2. The report basically shows weakening momentum in the sector.
The latest data on the ISM Manufacturing Index showed a reading of 57.2, just above consensus estimates of 57.1. This reading was the seventh month in a row that the gauge came in above estimates.
The latest reading on Construction Spending showed a very solid rise of .8 percent.
The rest of the trading week is filled with other key data points including Weekly Jobless Claims, ADP Employment Report, PMI Services Index, FOMC meeting minutes and more. In addition to the latest FOMC meeting minutes, Friday’s Employment Situation Report will likely be the most significant piece of data to be released. Consensus estimates are looking for 178,000 jobs with the unemployment rate steady at 4.7 percent.
Outside Markets: Stocks are moving lower in early action today. Interest rates are moving lower while the dollar index is climbing.
After the recent multi-month rally in stocks, investors will be looking to see if any dips are still bought, or if the market is in the midst of a shift towards selling on rallies.
The dollar index is back above the 100 level, and further strength in the greenback could potentially weigh on the metals.
The Big Picture: After a strong first quarter performance, stocks could potentially take a breather. Investors may want to see more action by the Trump administration regarding tax reforms and fiscal spending plans before chasing equities higher.
There does also appear to be some degree of risk aversion in the marketplace, as yields have not risen further and the metals have moved higher. Should some cracks begin to appear in the stock market, risk aversion could potentially increase significantly. Rising risk aversion among investors could potentially keep the metals complex well-supported and could possibly fuel a fresh leg higher in gold.
